Nigerian GSM Operators Plan 40% Tariff Hike

Nigerians GSM Operators Plan 40% Tariff Hike (News Central TV)

Telecommunication companies in Nigeria are planning to increase the cost of calls, SMS, and data by a 40 per cent, following the rise in cost of doing business in the country.

This was contained in a letter titled, ‘Impact of the Economic and Security Issues on the Telecommunications Sector,’ sent to the Nigerian Communications Commission.

From their proposed tariff, the price floor of calls will increase from N6.4 to N8.95 while the price cap of SMS will increase from N4 to N5.61.

The letter was written by the telecommunications companies under the aegis of the Association of Licensed Telecommunication Operators of Nigeria to the NCC.

In the document, the telecom companies said there had been a 40 per cent increase in the cost of doing business in the nation.

In 2020, transactions on mobile money platforms in Sub-Saharan Africa hit $490 billion

According to them, the telecommunication industry has been financially impacted following the nation’s economic recession in 2020 and the effect of the ongoing Russia-Ukraine crisis.

It explained that, this had resulted in an increase in energy costs, increasing overall operating expenses by 35 per cent.

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The recent introduction of excise duty of five per cent on telecom services, had further increased the burden of multiple taxes and levies on the industry.

The letter read in part, “As the commission may be aware, the power sector under the supervision of its Nigerian Electricity Regulatory Commission of the power sector in November 2020 undertook a review of electricity tariffs to cater for the economic headwinds reported above.

“In view of the foregoing, ALTON considers it expedient for the telecommunications sector to undergo periodic cost adjustments through the commission’s intervention in order to minimise the impact of the challenging economic issues faced by our members. Details are hereunder:

“Upward review of the price determination for voice and data and SMS. Given the state of the economy and the circa 40 per cent increase in the cost of doing business, we wish to request for an interim administrative review of the mobile (voice) termination rate for voice; administrative data floor price, and cost of SMS as reflected in extant instruments.

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“With respect to voice an SMS cost, ALTON respectfully requests the commission to consider a mark-up approach to address the upward price adjustment desirable for the industry. We have enclosed herein and marked as ‘Annexure 1’our proposal in that regard.

“For data services, we wish to request that the commission implements the recommendations in the August 2020 KPMG report on the determination of cost-based pricing for wholesale and retail broadband service in Nigeria. Excerpts from the report, are attached and marked ‘Annexure 2’ to provide a further illustration.

“In implementing the said recommendations, however, we recommend that the 40 per cent increase in the cost of doing business be factored in to arrive at a cost price per GB in view of the current economic situation.”

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The umbrella body for telecom companies added that to further help telcos during this economic crisis, the commission should explore and provide other means of penalising operators rather than punitive monetary sanctions.

Mobile operators on the continent have implemented measures to support vulnerable communities including offering discounts on mobile tariff and providing digital content and tools to help people and more small scale businesses get online.

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